Cochrane Development a Business Boon or Bane

Our View: New Development Must Bring New Businesses to Morgan
Hill, Not Compete with Our Other Retail Areas
Though the city’s plan to catalyze the yet-to-be-named development on Cochrane east of U.S. 101 shows promise of meaningful gains to the local economy, council members must be sure they are not simply robbing Peter to pay Paul.

Last week the council approved a plan to give an $11.5 million incentive, the largest in city history, to the 650,000 square-foot development proposed by Oakland developer Darryl Browman, San Jose’s J.P. Di Napoli and the Guglielmo family of winery fame. The $100 million development will enjoy fee waivers normally charged by the city as they build what many believe is the future engine to drive sales tax revenue. City financial planners estimate the new center will bring in as much as $26 million in revenue to the city over the next 15 years – that’s above and beyond the $11.5 million given away.

In all, the new center sounds like a boon for the city and its residents, but it may be a bane for other businesses struggling to survive – especially our downtown merchants. In reporter Matt King’s story Saturday, he detailed the rise of Gilroy’s outlet stores and how that went hand in hand with the demise of our neighbor’s downtown.

It’s not a stretch to believe the new Cochrane Center could be the final nail in downtown’s coffin, to say nothing of its effect on the current Cochrane Plaza. Though the city has approved the incentive package, the only confirmed tenant of the new project is Target – the anchor of Cochrane Plaza.

So the argument easily can be made this new center has thus far only created a shell game for current businesses already operating in Morgan Hill.

All of the current tenants in Cochrane Plaza have the option to pull up stakes and move once Target leaves. That creates a very realistic risk that the new development may simply replicate what we already have except in a newer facility on the other side of the highway. Not only would that situation fail to bring the predicted revenue, it would leave a local family that has done business and generated revenue in our fair city for years out in the cold. Cochrane Plaza could become a ghost town while the new center attracts the same old businesses – a textbook example of urban sprawl. An economic impact report even suggests Cochrane Plaza could fall victim to urban decay.

If the city could have collected the $11.5 million worth of waived fees over the next few years, it would have erased the budget deficit and re-energized the dwindling reserve fund. Likewise, an $11.5 million package to encourage economic development downtown would do wonders as well.

It’s not to say the council’s heart isn’t in the right place or that the new development won’t bring needed benefits, but should the city really have sacrificed 11.5 percent of the estimated project cost? Would the fees that normally apply to everyone else make the new center cost prohibitive? And, if so, is Morgan Hill ready for a development of this magnitude?

Certainly, the revenues the developers will reap from the new retail center include a healthy return on investment, made even sweeter by the incentive.

What’s most important is that the council remembers this project is designed to compete with other retail areas outside of Morgan Hill, not draw tenants away from our already established retail centers.

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